Bad accident properties, the trap of lump-sum appraisal… The Devil’s Real Estate Appraisal, a basic knowledge explained by a real estate appraiser YouTuber.

The book, “The Devil’s Real Estate Appraisal” (Crossmedia Publishing), co-authored by Seiken Taido, a real estate appraiser, and Momotaro Nakase, a YouTuber with over 700,000 registered users who is also a real estate appraiser, is getting a lot of feedback. The book provides easy-to-understand explanations of trivia about real estate transactions and inheritance from the perspective of a real estate appraiser, but what exactly do real estate appraisers do?

He answered, “Real estate appraisers are not in the “to C” business, but in the “to B” business. For example, we mainly work for asset management companies, banks, and governments. Lawyers and doctors are very close to us, so it is easy to feel that they are great, but perhaps because of that, the public’s perception of real estate appraisers is a bit subtle.

Real estate appraisers are one of the three major humanities-related certifications, along with lawyers and certified public accountants, but while there are currently 46,000 lawyers and 35,000 certified public accountants, there are only 8,600 real estate appraisers. In addition, as Mr. Nakase says, it is difficult for the general public to imagine what the job entails, partly because they have almost no opportunity to be involved in their daily lives.

The main job of an appraiser is to issue real estate appraisal reports. An appraisal report costs about 200,000 yen at the lowest, so I don’t think there are any opportunities for individuals to request an appraisal report. When is an appraisal report necessary? For example, when you need to determine the appropriate price of real estate that is being used for an investment project.

Simply put, it is a job that explains the basis for the price of the property. Although real estate companies often issue appraisal reports, it is not uncommon for those reports to be issued mechanically for each area. When asked to explain why the price is the way it is, they often end up saying, ‘Because the market price is like this,’ but since the appraisal report is well supported by each property, they can give a good answer when asked to explain.

In general, appraisers often engage in appraisal work when they become independent, but Mr. Yasumichi and Mr. Nakase are currently engaged in the real estate business, focusing on real estate sales and inheritance. Here are some of their unique “basic knowledge about real estate” included in this book.

Accident properties are too dangerous.

A property in which an incident concerning the death of a person has occurred (an accidental property) may have a significant impact on the judgment of a contract, so a real estate agent is obligated to inform the buyer/tenant of the fact of the accident. (Article 47 of the Building Lots and Buildings Transaction Business Law)
However, according to the guidelines of the Ministry of Land, Infrastructure, Transport and Tourism, there are some cases in which the obligation to notify is required and some cases in which it is not. In the case of a lease, the obligation to notify ceases after approximately three years have passed since the death was discovered (in the case of sales, there is no specified deadline and notification is mandatory). However, there are cases in which notice must be given even after many years. In addition, real estate agents are obliged to answer when asked by buyers and tenants about matters related to the death of a person, so those who are concerned about whether or not a property is an accidental property should ask the agent about it. (Excerpt from “The Devil’s Real Estate Appraisal”)

The rule of the real estate sales contract is that when purchasing real estate, you must inform the buyer of matters that are important for decision-making, such as ‘If I had known this, I would not have bought it for this amount of money. However, until about 5 years ago, this was not the case. However, until about five years ago, the extent to which this information should be disclosed was quite gray. It had been ambiguous for a long time, but the Ministry of Land, Infrastructure, Transport, and Tourism finally clarified it in a guideline between Reiwa 2020 and Reiwa 2021.

Although “accidental properties” are associated with the image of “cheap” properties, in reality, the value of real estate that is reduced by being an accidental property is lower than one might think. In popular areas, the decline is 5% to 10% for rentals and 10% to 20% for sales, and even in unpopular areas, the decline is 20% for rentals and 30% for sales.

One property I announced had two rooms, one with an accident and one without, for 55,000 yen and 60,000 yen,” he said. But the customers were like, ‘If it’s cheaper, I’ll choose that one. In a popular area, many people probably don’t mind if the rent goes down a little.
In fact, the rate of decline I have presented here is not based on much evidence, but rather on my own practical experience. It differs completely depending on the area, and we generally have a hearing at each evaluation,” said Yasumichi.

I tried a lump-sum appraisal of real estate.”

《If you use a lump-sum real estate appraisal site, you can easily obtain appraisal results from multiple real estate agents, and as a result, it is said that you can sell at a high price. Then, is it correct to ask the contractor who presents a high amount of money? The conclusion is no. It is because in many cases, it is not possible to sell at the highest amount. Since the price assessed by the real estate lump-sum appraisal site is not the purchase price of a contractor, it is not necessarily possible to sell at that price. (Excerpt from “The Devil’s Real Estate Appraisal”)

Since it is important for a real estate agent to keep a housing, it is quite common in the industry for a real estate agent to issue an appraisal report that is clearly higher than the market price, keep it at that amount, and then gradually lower the price and sell it. There are two disadvantages to this: the first is that it prolongs the sale period. If you have a mortgage, you have to pay interest during that time, and you also have to waste money on management fees and property taxes.

The other biggest disadvantage is that real estate is most likely to sell when it is first put on the market and has the highest number of viewings, but if you put it up for a strangely high price, it will be difficult to sell even if you lower the price several months later when the number of viewings is low. That is why we recommend to our clients that they put the property on the market at the same price as the market price from the beginning,” says Nakase.

He says that even some major companies submit an appraisal report at an amount higher than the market price in order to keep the property. Also, beware of flyers that often appear in mailboxes, such as “We have a customer who wants to purchase this condominium,” he says.

It is almost always a lie. It is sales talk. When a builder acts as an intermediary rather than a buyer, there are often no customers. For example, if there is a letter in a 40 million yen market rate condominium that says, ‘There is a person who wants to buy it for up to 50 million yen,’ and you say you want to sell it, they will say, ‘It’s already been sold at another property. There are cases where someone comes to preview the apartment, but they may be a fake. Then they say, ‘I’ve decided I don’t want to sell. In the end, the contract is often concluded at the market price,” said Mr. Yasumichi.

The man who changed his surname is rich.”

If you know someone who has suddenly changed his/her family name even though he/she never married, he/she may be a member of a wealthy family. The reason why wealthy families change their surnames is, as they say, for inheritance tax purposes. In order to prepare for inheritance tax, they may “adopt” a child and change the family name in the process.

There have been about two of our clients in the last six months. Three days before signing the contract, they suddenly said, ‘I changed my name, is it OK? But it is a case-by-case basis whether or not it will save tax even if they adopt a child. If you don’t check that in detail with your tax advisor, you will definitely fail. It is not enough to just adopt a child,” said Mr. Yasumichi.

The image I have is that inheritance tax is a progressive tax, with a maximum rate of 55%, but many people do it to reduce the tax rate by increasing the number of heirs. However, in extreme cases, if the inheritance tax rate is 5% to begin with, there is no point in adopting a child because the tax rate will not go down any further. I wonder if all the people who actually changed their last name have consulted a tax attorney properly. It is not easy for us to calculate how much tax is really saved in such cases.

In addition to this, there are many other questions such as, “I tried living next to a grave,” “Which is better, a detached house or a condominium?” The book also contains 42 explanations of topics in real estate that are of interest but difficult to ask about, such as “Real estate enclosures are too dangerous,” etc. A QR code to jump to the video is also included. However, these are only basic knowledge, he says.

The main idea is that by reading this book, you will acquire the minimum necessary knowledge so that you will not be deceived by the methods commonly used by real estate companies. However, I am sure that there will be new things that you will wonder about, such as ‘What about in this case? If you have any questions about such things, please contact us (laughs).

Whether you are renting or buying and selling, real estate knowledge can make all the difference in your daily life if you know what you are doing. It is worth knowing.